There’s been plenty of bad news recently in the world electric vehicles, mostly related to start ups like Fisker and Azure.  Adding to the mix, Deloitte has released a survey showing that battery electric vehicles (BEVs) are not very popular with Generation Y (ages 19-31).

The reasons appear to be multiple, including high prices for BEVs, a lack of environmental concern (which is a matter of some dispute), and a strong tendency to shop for used rather than new vehicles.  But there are two key points that came out of the survey that point to new mission-critical technology for BEVs:

• Connected vehicle telematics
• Wireless charging

72% of those surveyed want access to their smart phone apps in their car.  As I pointed out in my report, Electric Vehicles Telematics, the telematics systems in both BEVs and plug-in hybrid electric vehicles are more likely to be connected vehicle telematics that offer streaming media, cloud application access, and special electric vehicle functions.  This research backs up my findings that these technologies are not only important for the automakers to help build confidence in the vehicles, but also a reason consumers would consider the vehicles.

Survey respondents also stated that they do not want to be physically tied to the electric grid –a very intriguing finding that should help bolster wireless charging advocates.  While I can’t imagine that being tied to gas stations is that much more attractive than being tied to the grid, the time of the connection is likely the issue.  If the standard option is to charge wirelessly by parking-and-forgetting-it, I wonder how those survey results would change?

The survey underlines something I’ve argued for a while: the technology inside the car is what will sell the car.  The drivetrain should be secondary.  Specialty plug-in electric vehicle (PEV) applications have largely to date been focused on extending range and providing charging locations and route planning with ease.  In researching the telematics market for PEVs, similar to the findings in this study, I found that there is a high interest in the more advanced connected vehicle telematics for PEVs.  As a result, I am anticipating that high feature, connected vehicle telematics will grow to about 80% of the PEVs on the road by 2017.

With connected vehicle telematics, automakers and technology providers are just beginning to develop these new social apps and streaming content that will make PEVs a unique vehicle experience for their owners.  What this survey shows is that to attract younger buyers, PEVs will have to be both disconnected (from the grid) and connected (to their social and media world).

Fisker Automotive has hit a rough patch (a rock quarry may be a better way to characterize it, actually).  The company has seen excitement about the product crumble recently thanks to the recent, incredibly public, failure of the $102,000 Fisker Karma while being prepped for testing by Consumer Reports.  This was immediately followed-up with the all-but-expected whistleblower claiming he or she knew it all along.  At the same time, many see the freeze on loans from the U.S. Department of Energy as putting the kibosh on the company, or predict that SEC investigations of original investors will scare any future funding sources, or are of the opinion that the CEO change signals trouble for the company.  Any of these developments could mean that implosion is imminent.

Despite all this, two things can sure be said for Fisker:  the company designs sexy cars, and teenagers love sexy cars.  For his 18^th birthday, the heartthrob of 15 year olds everywhere, Justin Bieber, was given a Karma by his manager (no word yet if he lived close enough to the studio to make it home before the battery light came on).  Bieber joins several other celebrities with the opportunity to own this piece of vehicle history, because let’s face it, whether Fisker survives or not, the cars will likely be collectors’ items.

The strategy of putting celebrities’ sexy backsides into the seats of cars is not new.  Vehicle marketers have been using that strategy for decades (why do you think Chevy gives away a Corvette at the Superbowl?).  Fisker is wise to foster this strategy because over the years it has proven to work.  One of the most recent example comes from Cadillac’s resurgence, which many attribute to the Escalade’s appeal to hip hop stars and wannabe stars, bringing in younger buyers and growing sales to a peak in 2005 as the third largest luxury brand in the U.S. (beating Mercedes, just behind Lexus and BMW).  For a brand previously known for the Fleetwood and Seville, that was a dramatic turnaround.

Fisker faces a different situation because the brand is new.  But a “Bieber Brand Bump”, particularly among young people, is very important to help make Fisker seem less fly-by-night and make it an aspirational vehicle for youngsters.  Unfortunately, the quality issues have the potential to undermine any Bieber Bump, unless perhaps Fisker can convince Bieber to pick up a wrench and help improve the mechanics.

In the United States, there is one vehicle that is almost synonymous with the words “fleet vehicle”: the light duty panel van.  Most often white, these vehicles for decades now have been used by fleets for service or delivery vehicles and by small businesses for everything.  Having recently moved, my wife and I have had a seemingly endless parade of these white vans pulling up to our home recently –from the furnace repair company, the cable company, the tub refinisher, and for deliveries (every single one was white).

Businesses love these vehicles for their cargo capacity, towing capacity, size, and price.  Plus, these vans have been around for literally decades (with updates obviously), so finding parts, repairs, customization, and racks or storage options is not challenging.  However, these vehicles are not particularly efficient with fuel economy – about 12-14 mpg (combined city and highway).

These vans are purchased at high rate in the US.  In the last 10 years, Ford sold over 1.4 million of their E vans (the Econoline, immortalized by Neil Young, and the E-Series), while GM sold over 1.2 million of their G vans (GMC Savanna and Chevrolet Express).  I expect that the vast majority of these vans are still on the road today helping string cables, install furnaces, and deliver packages.  This is a large number of vehicles with low fuel economy using a tremendous amount of fuel.  My back-of-the-napkin estimate says that 2.6 million of these vans averaging a modest 12,000 miles per year burn over 2.2 billion gallons a fuel a year.

At least once a month, I have a conversation with someone asking about some new technology, alternative fuel drivetrain, or vehicle that is going to displace some of these boxes on wheels.  One that had been capturing headlines over the last couple years has officially failed.  Bright Automotive announced that they are closing their doors because they have been unable to secure financing through the DOE or another source.  But quick to step into the limelight is another company, VIA Motors, that is looking to retrofit GM vehicles, including the G van, as plug-in hybrids.  ALTe Powertrain Technologies also plans to offer PHEV conversions of existing vans.

What’s unclear at this point is whether the majority of big white van buyers will make the shift to expensive plug-in vehicle options.  To me, it looks like ALTe’s PHEV conversion of the vans seems well positioned for growth among big fleets with big budgets, while VIA Motors has a long way yet to go to prove its business plan’s sustainability.

Ford and GM are also betting on alternative fuels for their vans.  Both companies offer compressed natural gas (CNG) conversions of their vans, and recently AT&T announced that they will be purchasing 1,200 Chevrolet Express CNG vans (and yes, I’m confident they’ll be white).  Both companies also offer their vans in flexfuel versions that can run on E85, but fuel economy takes a significant hit, falling to about 10 mpg combined.

Competitors to the big white van have cropped up, including Ford’s comparatively diminutive Transit Connect and Transit Connect Electric.  Nissan is hoping to steal some share with its new NV200 cargo van (of which Nissan sold about 750 in January 2012, about 10% of the E-Series van that Ford sold that month).  After Dodge gave up on the RAM van, they switched to the Sprinter van from Mercedes to cover that same market, but never saw the same customer appeal as the GM and Ford vans.

As gas prices climb, Ford and GM may not see the van market recover to pre-recession levels, but the market is definitely on the upswing.  CNG versions of the Ford and GM vans seem likely poised for growth, and while smaller vans like the Transit Connect haven’t had had a huge impact, Pike Research anticipates that there will be some impact on the van market.

Will hybrids or PHEV conversions or retrofits of the vans see growth?  Recent history seems to indicate that customers and financiers are more inclined to support downsizing or alternative fuels.  The big white van market may be in for a bumpy road as gas prices climb, but for now, we haven’t seen the game-changing business model that will shift vans to electric drive trains in dramatic numbers.

Since 2008, the world of automotive manufacturing has collided in a more direct way with United States politics than arguably at any other point in history.  Faced with collapsing markets, General Motors and Chrysler gave in to the need for public support.  This combined with a political swing to the right in the 2010 mid-term elections has set the stage for political backlash for the big automakers and for new startup companies that took advantage of government loans and grants.  Even companies who don’t make headlines, like Ford and Nissan, are not immune to the politics as they are recipients of Advanced Technologies Vehicle Manufacturing (ATVM) loans.

This political backlash was never more on display than it was when GM and the National Highway Traffic Safety Administration were called into a congressional hearing over the Volt battery fires.  Subcommittee hearings, regardless of party lead, are often just a platform for grandstanding and political theater, and this one was no exception.  Listening to the hearing it became clear that Chairman Jim Jordan had little patience for NHTSA when an opportunity to criticize President Obama’s push towards clean energy presented itself.  For his part, GM CEO Daniel Akerson scored a high entertainment-value quote of his own when he said the now oft-repeated statement: “We did not develop the Chevy Volt to be a political punching bag. We engineered the Volt to be a technological wonder….”

In his opening remarks, Representative Dennis Kucinich all but declared the hearing pointless when he stated that, “a very detailed 135 page final report by [NHTSA] on its investigation into the Volt battery fire, which was made public on Friday, provides detailed answers to the question that this hearing seems to ask.”  The title of the hearing was “What did NHTSA know about the Volt vehicle fires & when did they know it?”  Perhaps the most perplexing statement from the whole hearing came from Representative Mike Kelly, the owner of a Chevrolet car dealership, who showed an improbable lack of knowledge about automobile development: “This is a halo car, not so much for General Motors but for this administration.  Taxpayer dollars are used to subsidize a product.  If General Motors thought this was a good investment, they would have launched it themselves.”  Thus implying that somehow, between 2009 and the fall of 2010, the Obama administration compelled GM to develop the Volt.

If you missed this piece of theater, don’t worry, this being an election year, there is plenty more to come.  A new transportation and energy bill passed out of a House committee in early February, but was subsequently broken up into parts.  The massive bill has many policies aimed at reducing gas and diesel prices and cutting spending on transportation, including reducing gasoline taxes, increasing truck weight limits, expanding offshore oil and gas drilling, approving the Keystone XL pipeline, and opening some leases in the Arctic National Wildlife Refuge in Alaska to oil drilling, as well as eliminating mass transit subsidies and removing funding for Safe Routes to Schools and Transportation Enhancement grants (where most pedestrian and bicycling infrastructure comes from).  There are also Republican-introduced bills that would eliminate any electric vehicle incentives (H.R. 3768 from Rep. Kelly) and would create a $1 billion (yes, with a “B”) cash prize for the automaker that sells 60,000 100mpg cars (H.R. 3872).  Meanwhile, a bipartisan Senate transportation bill is now being held hostage in a procedural move by Senator Rand Paul to secure a vote on ending foreign aid to Egypt.  Meanwhile, high-end EV maker Fisker Automotive is working to renegotiate loans with the DOE.  Like just about every other PEV automaker, Fisker has missed its target dates for launching a new model (the Karma), but in Fisker’s case these missed dates have put much of the DOE financing for its next model, the Nina, in jeopardy.  In the wake of the DOE reneging on Severstal’s $730 million loan for constructing an advanced lightweight steel plant in the U.S., it’s safe to assume that the negotiation seems destined to become mired in politics.  

Unfortunately, PEVs and ATVM loans seem inevitably destined to become political footballs.  And the theatrics of the process can have an impact on the attitude towards PEVs and contribute to mainstream buyers’ wariness toward them.